US stocks drop after Fed signals more rate hikes to come

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Wall Street stocks fell on Wednesday after the Federal Reserve kept U.S. interest rates unchanged but signaled in new economic projections that borrowing costs will likely rise by another half of a percentage point by the end of this year.

U.S. stocks have rallied in recent weeks, lifting the benchmark S&P 500 and Nasdaq to 14-month highs following signs of economic resilience, a better-than-expected earnings season and bets that interest rates are near their peak.While megacap technology stocks have driven much of the gains this year, economically sensitive small-cap shares as well as material and banking sectors have joined the rally recently.

Declining issues outnumbered advancing ones on the NYSE by a 1.68-to-1 ratio; on Nasdaq, a 1.81-to-1 ratio favored decliners. The S&P 500 posted 40 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 84 new highs and 52 new lows. Reporting by Shristi Achar A and Sruthi Shankar in Bengaluru, and by Noel Randewich in Oakland, Calif. Editing by Vinay Dwivedi and David Gregorio

 

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